White collar criminals have gotten a lot of publicity today. When thinking about cases such as Enron and Bernie Madoff, do you think that punishment for white collar crimes are too harsh or too...

White collar criminals have gotten a lot of publicity today. When thinking about cases such as Enron and Bernie Madoff, do you think that punishment for white collar crimes are too harsh or too lenient? How would you change them?

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kipling2448's profile pic

kipling2448 | (Level 3) Educator Emeritus

Posted on

“White collar crime” encompasses a great many offenses, from the various types of financial fraud to intellectual piracy and money laundering.  It includes all manner of insurance scams and the use of “insider” information in determining when to buy and sell stocks.  The range of damages to innocent citizens can similarly extend from minimal to catastrophic.  Because the concept of “white collar crime” does encompass so many illicit activities and involve such a broad range of victims, the penalties associated with it must involve a certain level of flexibility.  When discussing some of the more infamous cases of white collar crime, including those involving Bernie Madoff, Ivan Boesky, and Allen Stanford, the extent of harm inflicted on innocent investors and others was substantial, and the penalties should reflect that.  The question, however, is easier to pose than to answer, as the American concept of justice does not allow for “cruel and unusual punishment,” as the Eighth Amendment to the United States Constitution clearly stipulates.  The question, “what is just,” rarely lends itself to easy answers, but the American public definitely believes that the criminal justice system is too lenient with white collar criminals, as the absence of a pattern of prosecutions associated with the large-scale bank failures that followed the economic crisis of 2007-2008 demonstrated.  (Missing from this latter case, however, is a determination of what, if any, crimes were actually committed, as opposed to suffering caused by ineptitude and even venal but legal conduct.)

Allen Stanford was an enormously successful financier currently serving a 110-year prison term for the crime of operating a Ponzi scheme that defrauded an estimated 28,000 investors in his Stanford Financial Group to the tune of some $7 billion.  Far fewer people, however, are familiar with Stanford’s case than are familiar with Bernie Madoff, who was convicted of the identical crime and sentenced to 150 years in prison (i.e., a life sentence).   Madoff’s fraudulent activities involved far fewer victims, but much more money, his fraudulent scheme having been estimated at $50 billion.  A key distinction between the two cases, however, involved the many famous people, such as, successful actors and the noted Holocaust-survivor and author Elie Wiesel, who had invested with Madoff and lost substantial sums of money.  While many of Madoff’s victims will recoup their initial investments, however, Stanford’s victims will likely not receive the financial remuneration to which they are entitled, as investigators have not succeeded in recovering the convicted criminal’s assets.  The Stanford and Madoff cases involved serious penalties; other prominent cases, however, did not, and fed into public frustration with the appearance of leniency with regard to white collar crime.  Ivan Boesky was the face of the financial excesses of the 1980s, and his crimes, conspiring to file false financial information with the government, involved millions of dollars in fraudulent earnings, but the main victim of Boesky’s crime was the system itself.  Insider trading and filing of false financial data do not necessarily harm individuals and families, depending on the case, and Boesky’s three-year prison terms and financial penalties were deemed appropriate by prosecutors at the time.  That so much wealth was accumulate illicitly did not drive-up the penalties to which Boesky was subjected, although subsequent civil penalties were substantive.

All of this is intended to illuminate the broad universe encapsulating white collar crime.  It is difficult to definitely state that certain individuals convicted of white collar crimes should have received harsher penalties.  Ponzi schemes – named for the Italian-American businessman Charles Ponzi whose 1919 scheme defrauded thousands of investors – by definition involve many innocent victims, as new investors are constantly solicited to pay-off anticipated earnings for earlier investors, with little or no actual revenue generated through legitimate investments.  Insider trading, a constant concern among government regulators, particularly in the Securities and Exchange Commission, may not have any human faces to accompany their exposure save those of the individuals committing the crime.  A single individual or small group of people – and insider trading invariably involves very small groups or single individuals because of the nature of the crime – are the only publicly-visible face of this particular activity, in contrast to the many victims of Ponzi schemes who provide the public a much more concrete image of victimization.  The integrity of the financial system is the victim of insider trading, and that constitutes a much more difficult crime to envision on the part of many juries, so the penalties tend to be much more lenient.

One factor that appears to skew perceptions of fairness or justice with respect to government prosecution of financial crimes involves the different sections of U.S. law pertaining to such activities.  There are two main sections of the U.S. law that involve financial crimes, Titles 18 and 31 of the United States Code.  Title 18 falls under the jurisdiction of the U.S. Department of Justice, and involves violations of criminal statutes against illicit financial activities.  Title 31, in contrast, falls under the jurisdiction of the U.S. Department of the Treasury and is primarily concerned with oversight of banks and other financial institutions, with money laundering being the main crime of concern.  Crimes committed in violation of Title 18 are subject to harsher penalties, because they involve criminal prosecutions.  Violations of Title 31 rarely involve criminal penalties, and are more concerned with civil law.  Consequently, penalties associated with Title 31 infractions tend more towards monetary fines and asset seizures.  Banks determined to be in violation of Title 31 provisions may suffer financial penalties, and may even be barred from operating, but to the public, such penalties appear inadequate, because the guilty individuals are wearing suits and ties and living in nice suburban neighborhoods. 

Whether the penalties associated with white collar crime are generally fair is entirely a matter of perception.  White collar criminals – excluding financial crimes carried out by organized criminal groups like the Mafia, which also engage in many types of violent crime – are not associated with the fears the prompt us to install dead-bolt locks on our doors and to purchase firearms for our safety.  The linkage between such crimes and public safety exist, but are too murky and abstract.  Street crimes like rape, robbery, murder, etc., may ultimately be traced to financial inequities that permeate our society, but the images associated with such crimes prompt the public to demand harsh penalties.  Anger associated with white collar crimes tend to be more ephemeral.  We get angry, then we move on.

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kakakamal's profile pic

kakakamal | eNotes Newbie

Posted on

The punishment for white crime has always been a matter of great discussion because of the reason that some people think that white collar criminals should not meet extreme punishments . The logic they put forth is that the white collar criminals do not indulge in any kind of act which is detrimental for the law and order situation of the country.Although they are performing criminal activities  but they are a direct threat to the people at large, so the punishment they deserve should be of somewhat kind nature.

  At the same time it must be noted that in spite of the fact that they are not involved in the direct law and order situations they are playing havoc with the economy of the country with the economy of the country dwindles day by day and the poor inhabitants of the country continue to become poorer.Keeping this point of view in mind , it becomes all the more important that these white collar criminals must be dealt with iron hands in order to make the country prosper.

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